NEW YORK – The for-profit college with close ties to the Clinton Foundation that paid Bill Clinton through a shell corporation more than $16 million since 2010 to be its “honorary chairman” and international pitchman plans to go public despite some $4.7 billion in corporate debt.
Those who stand the most to gain when Laureate Education goes public include top-name, left-leaning investors attracted by the cache of Bill Clinton’s endorsement such as George Soros, Henry Kravis of Wall Street investment banking firm KKR and Paul Allen of Microsoft fame.
WND reported Bill and Hillary Clinton’s attack on Donald Trump over Trump University could invite increased scrutiny of the Clintons’ involvement in Laureate. While the Clintons were collecting millions, Hillary Clinton’s State Department funneled at least $55 million to a group run by the CEO of the college company, Laureate Education Inc. In addition, attorneys suing Trump U paid $675,000 to the Clintons for speeches, and the firm suing Trump University was founded by a wealthy San Diego lawyer who served a two-year sentence in federal prison for his role in a kickback scheme to mobilize plaintiffs for class-action lawsuits.
A study published by the U.S. Senate Health, Education, Labor and Pensions (HELP) Committee in 2012 warned that going public increases the financial pressure to generate a profit. Typically, the relatively small number of first-stage investors that brought the for-profit college as a private entity to the IPO stage are taken out by a larger number of public and institutional investors that anticipate continuing competitive stock appreciation of the public company.
So, as a result of going public, increased pressure on the management of the for-profit college for appreciation in stock prices is expected to increase the pressure to engage in the deceptive marketing practices that characterize these institutions.
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Those most disadvantaged end up being the non-traditional students who typically attend for-profit colleges, including those who delayed entering college, those who work part time or full time while enrolled, and those who have dependents other than a spouse to take on burdensome levels of debt.
Highlighting the concern about for-profit colleges going public, the Senate HELP Committee report noted that more than half of those who enrolled in for-profit colleges in 2008-2009 left without a degree.
On Aug. 8, 2010, Sen. Tom Harkin, D-Iowa, while he was still chairman of the Senate HELP Committee, published an article in Forbes in which he warned that for-profit colleges encourage students to enroll in expensive programs and take on huge levels of debt. Most students never graduate, while drop-out rates and defaults on student loans are extremely high.
Harkin highlighted the following conclusions:
- Ninety-eight percent of for-profit students take out student loans, compared with only 38 percent of community college students.
- For-profit students are eight times more likely to graduate with debt greater than $20,000.
- For-profit colleges account for only 10 percent of students enrolled in higher education, but those students receive 23 percent of federal student loans and grants and account for 44 percent of defaults.
Clintons’ impact on Laureate revenue
Peter Schweizer, author of the 2015 bestselling book “Clinton Cash,” has argued that the Clintons played a major role in boosting Laureate Education revenue as the private company prepared to go public.
“The relationship between Laureate chairman Douglas Becker and the Clintons formed in the years before Hillary became secretary of state, when Becker started showing up a Clinton Global Initiative (CGI) events,” Schweizer wrote. “In 2008 Laureate became a partner with GCI. By 2009, Becker was paying Bill to give speeches at Laureate campuses in Spain, Brazil, and Peru.”
In addition to running Laureate, Becker is chairman of the International Youth Foundation, IYF, a non-profit sister organization that runs various programs for Laureate, including a YouthActionNet. The initiative, announced by Becker at the CGI annual meeting in 2010, is aimed at placing fellows on Laureate campuses in Brazil, Mexico, Spain, Peru, Chile and Turkey.
“Shortly after Bill became honorary chancellor in April 2010, Hillary made Laureate part of her State Department Global Partnership,” Schweizer noted. “IYF had already received financial support for USAID before Hillary became secretary of state, going back to 2001. But the amount of its grants has exploded since Bill became chancellor of Laureate. According to IYF tax filings, in 2010 government grants accounted for $23 million of its revenue, compared to $5.4 million from other sources. It received $21 million in 2011 and $23 million in 2012.”
Schweizer also reported that in January 2013, just before Hillary left her position as secretary of state, the International Finance Corporation, IFC, made a $150 million equity investment in Laureate.
“The IFC is part of the World Bank,” Schweizer commented. “The head of the World Bank at that time was Jim Kim, a Clinton friend and a cofounder of Partners in Health, a partner of the Clinton Foundation.”
While Bill and Hillary Clinton have not specifically endorsed the decision of Laureate Education to go public, the Clinton Foundation has yet to repudiate or issue any caution regarding the company.
A notice on the Laureate International Universities website continues to point out that “Laureate has partnered with the Clinton Global Initiative (GCI) on a number of initiatives since 2008.
“GCI convenes global leaders to create and implement innovative solutions to the world’s most pressing challenges.”
Clinton cuts ties with Laureate
In April 2015, Jennifer Epstein writing in Bloomberg Politics reported that Bill Clinton decided to leave his five-year position as Laureate Education’s “honorary chancellor,” but not before he had visited 19 of Laureate’s 88 campuses around the world and spoke to tens of thousands of its students.
Epstein noted Clinton’s departure was precipitated by his wife’s run for president. As the campaign unfolded, she joined Massachusetts Democrat Sen. Elizabeth Warren in blasting the federal government “for currently subsidizing a for-profit industry that is ripping off young people.”
Epstein noted these concerns evidently had not surfaced in 2008 when Hillary accepted a contribution of $4,600 to her presidential campaign. It was Becker’s second campaign contribution to Hillary, as he also gave her $2,000 for her 2000 Senate campaign.
In “Clinton Cash,” Schweizer posed the following questions: “Isn’t it troubling that while Bill Clinton was being paid by a private corporation, that corporation was also benefiting from State Department actions? Isn’t it troubling that an affiliate of that corporation is also receiving tens of millions of dollars in taxpayer money? Isn’t it troubling that this seeming conflict of interest was not disclosed?”
Epstein and Joshua Green, reporting for Bloomberg Politics in April 2015, noted they had received an email from Schweizer.
In the email, Schweizer suggested Bill Clinton’s abrupt resignation from Laureate Education just as Hillary Clinton was preparing for her 2016 presidential campaign appeared to be a tacit acknowledgment that he was fully aware of the negative political consequences of the questions Schweizer had posed in his book.